DAO tokenomics: using tokens for governance and community incentives

Transcript

what's up friends welcome to web3 academy a place for entrepreneurs creators and marketers to explore and learn how to use web3 to transform business models and create thriving communities enjoy this next episode gmgm welcome to web3 academy it is the weekly doer spotlight i'm jay bird coming at you from whistler canada as always joined by my co-host kyle read head with subchi what's going on guys i'm portugal i've made my way to europe finally so i'm here and i'm ready ready ready for the podcast ready for europe life i don't even know what ready you're for but you're ready all right well today on the show we have

lucas campbell with us lucas is the senior editor at bankless and the co-founder of bankless dow he also engages with teams on tokenomics and governance through fire eyes dao where he's worked with industry industry-leading projects like ave balancer git coin super rare ens optimism and more welcome to the show lucas great to have you here thank you guys uh i'm also in europe right now 105 degree weather so we're uh we're sweating but we're gonna make it through it i have ac at least lucas does not wait at the ecc conference he does not have it i feel poorly why my phone is off right now because i'm just in a puddle of

sweat and his router is melting so if the internet messes up it's uh that's the weather's fault well let's start with a little bit of a personal question it's funny the personal question considering we're talking so much about the heat but lucas from creeping you a bit online i see that you are a serious stud on skis i'm looking at your twitter right now and i believe it's a photo of you doing a backflip on skis myself living in whistler i'm a big snowboarder so i just gotta ask is it true that you're the best skier in web3 that uh that's a good argument honestly um

i definitely grew up in like a deep ski background like did it competitively my whole life um and i now live in sun valley idaho so i'm a part-time ski bum during the winter uh skiing 60 plus days a year so definitely try and shred as hard as i can don't know if i'll take the title as best ski in web 3 but uh i think it could definitely contend for the title if there's anyone out there do you know anyone else in web 3 that might be able to uh compete with you um the co-founder of dune analytics is a blank name right now but he's a shredder i've seen him really nice nice jake can you do a backflip on your snowboard you're living in whistler no i don't think i can compete at the uh that level i i definitely i definitely can

compete at the getting on the mountain 60 plus days a year but yeah i didn't i didn't i didn't make it to the professional level or semi-pro level or anything like that it broke my risk trying to do a 360 when i was like 13 years old and that was the end of my trick career as a snowboarder [Laughter] just got to keep going got to get back up and rip another that's right that's right well we'll we'll meet up in the back country this year lucas and uh and make a booter and have some fun calm down let's rip it all right well let's uh let's start as we always do our favorite question to start every podcast is to understand your rabbit hole story so

take us take us back to the beginning of how you first fell down the crypto rabbit hole lucas yeah i think um so i kind of always grew up with like a lot of interest in money and finance i started trading stocks when i was like 14 15 years old i'm just like doing a lot of research through and like trading through like my dad's account and whatnot um 18th birthday opened up a schwab account brokerage account was trading with the little money that i got from graduation and that kind of like definitely use that money to like pay my tuition and learning how to kind of invest into different asset classes um and i think just being young i was definitely very risk on like you know if you have a thousand two thousand dollars like going eight percent a year is obviously

not the what you want to be doing and making your eighty dollars hundred dollars a year um you want you want the five 10x's and uh yeah i was always just super interested in money and finance was studying economics at the university of colorado and boulder um and had come across crypto a few times before um throughout like high school and college and then yeah may 2017 april 2017 um my buddy called me up was like yo have you heard about this ethereum thing and i was like yeah like you know i played around with it a little bit but like you know nothing too serious and he goes well it's 5x in three weeks and uh that alone was just like enough for me being a full dj to be like okay what the hell is going on here and um yeah funny enough i

ended up like just going full down the rabbit hole ended up losing all my money trading options like right around the time i was uh going down the crypto rabbit hole and i think that was at the time was really devastating but also a blessing in disguise because i did had no money right to invest into crypto and i literally just spent that whole summer going into my senior year of college just learning about crypto and ethereum and smart contracts and how this um new technology can change the world and i had no money to invest and just had to spend all my time just doing research and that's how i scratched my itch and then um yeah slowly started getting into it more and more and then uh yeah come around senior year was looking to uh get a job and like you know i

could have gone the trout fire out gone on work at like fidelity or some bank or some and was just not about it and uh saw the opportunity for crypto and just went full on or full down that rabbit hole and um was lucky enough that we had a blockchain club at the university of colorado cu blockchain and i met my good friend cooper turley koopa trooper on twitter and uh yeah we connected really well and just um started our crypto's career crypto careers together there and uh the rest is history took a few years of grinding but um yeah we ended up being in a really good position obviously right now we're we're in a great position within the industry and uh was a lot of hard work to get there but um yeah that's kind of a little bit of a

background on my crypto journey and how i got here sometimes losing it all can be the the best thing for you isn't it it's a good one right yeah if you can get back up that's the problem some people can't uh but kudos to you for for being able to do that um it's interesting you just told a story about how you lost it all uh and now you're basically consulting projects uh with fire eyes dow on how to manage their tokenomics uh so i'm interested to hear you know how did you get into tell us first like what fireeye's dow is and then just talk about like what got you into that like what led you into um into actually working with projects and helping them figure out their tokenomics and all this kind of stuff yeah so i think it was actually like a

pretty smooth transition um so me this was always my interest was like poking at econ like token economics um given my economics background studying that i was just super interested in that and like during the ico craze me and cooper literally started working together working on icos like really shitty icos that never made it out the door we learned a lot and um that was kind of always the goal um obviously during the bear market 2018 2019 tokens kind of went to the wayside no one cared about them no one wanted to launch tokens anymore so we ended up just finding our niche writing about d5 when it started popping up and that's kind of where we ended up finding our niche but in terms of fire eyes yeah me and cooper were working together a lot very closely um our new zealand down under friends

callum and james we're also doing the same thing um without us knowing and then uh yeah cooper and james ended up meeting at a meet up in san francisco and started talking about this idea of like a token guild so essentially what we were already doing but kind of making it more in a doubt format and a more collaborative um and that kind of spawned fire eyes and that really came about um probably like a year later right around cobit uh when we were all just locked away and we were just like what the hell are we gonna do with all of our time and um yeah we came together four of us and we just connected really well like we would literally spend three four five hours a day on zoom just ship posting and like having fun and like talking about this stuff um and that

ended up landing uh our first client which was like pillar wallet and then um james and callum have done a lot of work with like ave or ethan before uzabe and synthetics so he had some connections there um and that really helped um drive us forward to landing ave is like one of the first major clients so we helped with like the abanomics and that ethan to ave transition and that kind of put us on the map as like a token econ agency um within crypto and like from there we just kept the momentum going and helping launching other industry leading projects super cool super interesting um did you say avenomics is that what they said what they call their tokenomics that was what it was called yeah i don't know if they stuck with it but uh that's what i

remembered as i love their navy they have like the rave for their raves too they're they're great with that thursday this week is that this thursday in paris nice i'm sure that would be a good event i should uh i should fly over it's like i don't know from lesbian it can't be too far it's gonna be a quick hop over um so let's let's start high level here um and just i want to talk about tokens in general why do projects need a token maybe you can just give us like a high level overview of like what is the sort of use case for these tokens um what is the the purpose for them um and so why should people be thinking about this and like why not just if someone wants to start a business in web 3 why not just start like a normal llc or a normal

corporation like what is the reason why you know one i guess these tokens interest you so much but like why do we need these tokens and why is it such an unlock for um for business i guess yeah i think the tldr there is coordination and ownership um so erc20 tokens provide like or just any tokens even non-fundable as well provide a native digitally native way to coordinate people over the internet and i think that's really powerful and something that you don't see in web 2 or traditional finance with stocks and whatnot obviously those are digital right now but you don't really see the same level of communities that are created when you build it on this like permissionless network this crypto native network um so i think at the end of the day like it allows tokens allow projects and protocols to coordinate

efforts within their community and distribute ownership to their community in a really crypto native way and we've always seen that be very powerful in different you know aspects of of the crypto economy so far yeah i think one of the the other really interesting things about tokens versus like starting a you know corporation uh because obviously you can give ownership through a corporate you know corporation but you gotta like you know you gotta give shares to people and like it's just so difficult to do the normal way right you gotta go and get the government to approve you to open up an llc and then you gotta go create a bank account and then you got to get people to sign and get the you know whoever the owners are and the treasurers and blah blah blah and it's just such a hassle and like try to do

that with people who are outside of the us or outside of whatever country you're you're creating it whereas like with a token it literally takes you like i don't know 30 seconds depending on like you know if you use coin buys or something but it literally takes you no time and all of a sudden boom you have a coordination tool you have ownership of this community or whatever and it can be available on public liquid markets within like seconds as well to me it's just like it's an insane unlock versus the you know the kind of analog world of business yeah and i think the the big unlock here is that it's all on a universal platform like amazon knows their users you know their email address all that stuff but they don't have financial information to give distribute them amazon stock but on ethereum you have an ethereum address

that is your email address and that is also your bank account address so you can intertwine like using a product and ownership and value in that product into one sustained mechanism and that is like an erc20 token and it's really easy it's significantly easier to distribute value to people to users um because everything's on the same platform there's the universal standard for all of it absolutely um so i'm gonna kind of let you take the floor here on this one because it's gonna be just an open open question but i'm just curious there's a lot of people that listen to our podcast that are looking to launch tokens they're either launching nft projects they're launching dows they're maybe they have a community and they want to launch a social token or

whatever it may be there's a bunch of use cases for this um and so i know this is kind of a difficult question but like when someone is going to launch a token what are the first sort of things that you need to be thinking about like what when you start to this maybe you can make us a framework or a sort of a step-by-step process like what kind of things are you thinking about when you're like hey we want to launch a token for x project yeah i think um this is a great question i wish we we could probably do the whole podcast just on this question but um i'll try and keep it pretty short um but i think the first thing is like you have to if you're looking to launch a token or an nft or something like you want to have a mission or an end goal in

mind right um you want to have like what is the what is the goal for unit swap it's creating you know universal liquidity um that anyone can trade any tokens on ethereum or any other chain right obvious to create like this universal global lending market um and like maybe something like bank list out is to create a community that's empowered to create crypto products whether it's media education culture products um so i think that's the first thing is what are you building around what is that mission what is that product um that is probably the first step is figuring out what that is i think after that it's also building a community so step two i would say is like building this community right um who are the people who's using the products who wants to engage how are they contributing um all of that stuff

um so whether that's creating like a central area like a discord um for everyone to communicate there's like just a central hub for the entire community to talk to each other and build around um that is a big step and like creating a community right who bows and like as a whole crypto even like more broadly it's all about vibes right like you need to have good vibes and like community is when you have good vibes you build a good community and um so building a good community is definitely a big step and like you see this all the time with token projects like the ones without a community without people backing and supporting the product without those avid power users that are harassing you on like your replies like you need those people to be there to support your

product and all of that so like building community is probably like the hardest thing i think um when you're looking to launch like some sort of tokenized product um but yeah building the community is obviously a huge piece and probably the most valuable one um and like that'll take time i think like it doesn't happen overnight um but you definitely need a community in order to have successful web3 project right now um after that i would say the next step is probably establishing a treasury and i think this is probably like the big unlock with web three so a shared treasury so um you see a lot of protocols right now with you know the unit swap treasury is worth you know maybe a couple hundred million now because the tokens down or you know a couple billion um so that gives the

community ownership right so we're back to step two it gives community a way to um control this treasury right you need and what this does is like the treasury allows you to um achieve the mission right so like what are you trying to do the treasury is the capital that allows you to deploy that and like having this shared bank account with the community that they can all decide on where to deploy that capital is really important um when thinking about launching a token um i would say after that a governance framework so how are you actually governing that treasury and the things around it so like whether that's protocol parameters or you know social consensus constitutions all that kind of stuff figuring out what the governance

framework um is for that product is super important and then finally the fifth step there is how is that governance gonna happen whether it's an erc20 token or an nft how are you distributing ownership over that shared treasury and how are you governing that shared treasury um with what you vehicle are you governing that um so those are kind of the five steps so real quick recap you want to have a mission you want to have a community you want to have a shared treasury you want to have a governance framework and you want to have ownership an ownership framework so those five things kind of loosely encompass like how to approach how to launch a token and all the boxes that you need to make sure that you have checked off

well done i love i love frameworks you simplified that very well i'd love so first i want to dive into governance and we're going to talk about a lot of your thoughts there i also want to talk into like how do we accrue value to these tokens so they're not going to zero like a lot of tokens do uh but i love that you started with mission and community i get so many people like i just want to launch a token i want to launch an ft project i want to launch a token whatever and you're like for what like why right it's like you need a business you need a mission first you need the people that are going to help you achieve this and then you use it to organize and and like you said create a treasury um and and do all those uh those kind of things

so um i just have one question actually when i think of examples like board ape yacht club they didn't have a community they just went straight to token i know i know this is an nft it's a little bit different um but what are your thoughts on this it's like there are some projects out there that just go straight to token to start and then try to build community around that token or try to build you know value around that token do you think that it's kind of an anomaly or do you think that this is also something that you know we'll continue to see in this space um yeah i think like the nft approach is a little slightly different than the framework uh like within that framework um obviously like 48 doesn't have a community if you don't have nfps like that is the product that is the mission

is to create like this really cool nft um project and community and ecosystem um so i think that is like it is a slightly different framework when you're talking about nfts and especially like these pfp projects um boardape was definitely uh i would may i wouldn't say an anomaly but it was definitely a really good example of how to go about it if you just want to launch an nft first um and they were really intentional on how they did it whether it was like building that lore you know launching that first derivative with like the dogs and all that stuff um it created a really avid community around it and um yeah i wouldn't expect that to happen over and over again like i wouldn't use that framework um if you were going to head and like launching your own project

but i think generally like nfts kind of you launch the nft and you hope that the community is built around that and if you launch a really good nfp product that's super thoughtful and authentic and legitimate you know you have a good shot at building that community and that mission and all that stuff around that um so it's definitely a slightly different approach but i think like at the end of the day if you wanted to be successful you need all five of those pro those boxes checked off that we mentioned earlier right so let's uh let's let's let's look at each five of those boxes uh so number one was mission goal let's let's not dive into that one in this episode very interesting one but not for this episode build community also super important and we could have an entire episode on that

but i'm gonna skip that one again for this episode uh the three the three last three so the shared treasury governance and ownership framework let's dive into each one of those three um first just quickly on shared treasury i feel like this probably isn't much of an onion but any considerations that you would advise if somebody's establishing a shared treasury yeah i think um some of the big tools that is like super popular right now is just like establishing a gnosis multisig and getting community members as like the multi-stick designers um obviously that pairs really well with like governance so like how that those multi-six signers are um kind of you are

executing transactions based on the governance framework um but i would say like yeah in terms of like tools if that was like the question i would use like a gnosis multisig it's like the the standard um right now across um pretty much every dow right now in terms of like creating a shared treasury cool that step three seems like the simplest step out of this entire framework if all these steps were that simple it would be this podcast would be so easy okay let's talk about governance framework uh obviously a big one so many different ways you can go with governance i know you've participated in multiple different projects so maybe you want to use one of the projects you've helped set up their governance as an example of the best way to create or maybe not even we don't even

necessarily know what the best way is but a couple of the different ways to establish a governance framework yeah i think this is a great question um and this is definitely being actively researched across the industry on what is the optimal governance framework um but i think from a high level you want some sort of like transition from off chain to on chain so i think like what this looks like is you know some high-level community discussions um whether that's on discord or wherever your community is based um and then maybe that moves on to something a little more formal like a form proposal right so maybe you guys have an official form um that really fleshes out all the details kind of builds out the spec in detail um and once that's through you

know maybe the community loves it um that can go maybe more on chains so i think like the standard right now is snapchat where you're getting token votes or uh involved there right so rather than just like a form account you're actually getting token and web three um votes involved and then usually a lot of dials pretty much stop there where snapchat is like this semi like kind of on chain off chain mechanism um but the fourth step there would be going full-on chain so like these fully on chain executable executable governance um proposals and you see this a lot with like the compounds and the unit swaps and whatnot where there's a governance proposal up for vote on something like pally and uh if that proposal passes

it's all very automated um so the difference there is like when that proposal passes the the contract is executed autonomously there's no like funny business happening whereas snapshot you're still relying on some sort of like social consensus um whether that is the multi-stakeholders to make the transaction um or whatnot but there's no like formal on-chain execution of the governance proposal um but generally that is kind of like how i do establish that framework is slowly going off train to on-chain and more like across that spectrum over time and clearly one of the biggest aspects of creating uh successful governance is

is is creating engagement and and also creating a a model that's simple enough that people can understand how to participate and why their tokens matter and how to use their tokens uh so does that come into consideration when when you're when you're working with a project at fireeyes trying to think about how to i guess educate the uh governing body and the uh participants the dao participants in order to be able to participate in governance yeah i think um onboarding people into governance systems is definitely the harder thing to do um

i think uh probably the biggest misconception right now is that everyone in the community has like um the right decision to make when really in reality there's only a select few of individuals within the community that might have like the right ideas and should be empowered to make governance decisions and that's obviously like super you know it butt heads with the decentralization ethos and the permissionless ethos of crypto where everyone should have voice um but at the end of the day that's not always the best uh the best avenue but in terms of like actually educating your community based on like governance um i think this is a really underexplored area and a lot of products are working on doing that um so you saw like stuff where you were kind

of like forced to do it with ens where like you were going through it and you were signing the constitution and you were like leveling up on okay this is the community handbook on how to approach governance decisions in the future and you were forced to do that if you wanted to claim your ens airdrop you had to go through and sign that constitution and read it and all that stuff so figuring out like these optimal ways to educate these users and make sure that the community is well equipped to make the best decisions possible at all times is um something that i think is being actively explored in research and implemented just across the board right now and i think we're getting better at it but um we're definitely nowhere near as close to where we want to be yeah i liked i liked what you guys did

with optimism there was like a quiz basically that you had to complete before you could claim your tokens i thought that was uh that was really cool one of the things that you guys experimented with with ens i noticed and i think with optimism as well um was in terms of governance was delegating and so it kind of goes on what you're saying is like not everyone really knows what they should be voting on like for me i don't know enough about layer twos and optimism and its technology to like decide on where this you know where the dao and the technology of optimism should go i it's just not my that's not my realm and so instead i was able to delegate it to a friend of mine uh david mihal who was actually on the podcast a long time ago

because i know he's one of the people that i follow to learn about this stuff so i think the delegation aspect is really cool um but you did it in i think with autism there's a few ways there was delegations but then there was also like an nft that i think is soulbound maybe can you just sort of talk about those different ways that you guys are iterating on governance right now yeah so actually the first people or like the first project that really pioneered like the delegation on obviously it's been like you know we've seen it over and over you know through the years in crypto but bitcoin was really the one that like ens is based off of in optimism and even element finance which is also another product we worked off they all kind of built off this uh delegation framework that get

bitcoin pioneered and like that whole flow um in terms of like different governance frameworks so like optimism is doing this soul bound nft experience with like the citizen house and the token house so for those that are not familiar there's two essential essentially there's two governing bodies for the optimism collective one is the citizens house which is going to be governed by a soul-bound nft which is going to probably launch sometime later this year early next year and that is leveraging these soul-bound nfps to kind of try and dial in and like focus on these one human one vote um perspective um whereas the or the yeah the token house is an arc 20 um based governance system that has like a different kind of governance mandates um but they're going

you know the very standard erc20 token where one token is one vote um you know obviously there are drawbacks here and there's obviously drawbacks with the citizens house but i think like some sort of combination that optimism is pioneering here um is probably the right model or at least the closest model that we've seen to optimal um to date so far the the soul bound nft this is earned is it not like it's you have to be contributing or have had to have contributed for a long time in order to get these or how does has one earned one of these sold-out nfts yeah i think that's still being fleshed out so i don't have the the full answer but um i think tldr from my best understanding is that the optimism foundation or um yeah i think it's like the optimism

foundation is going to kind of like experiment with this and select like you know the first cohort of citizen house members and they'll be kind of the governing body over specifically the retroactive pgs so public good funding that's a whole different concept that maybe we can dive into or maybe that's a little beyond the scope of this podcast but um yeah i think to start it's definitely going to be a selected kind of permission group of people um and that'll expand over time so the but the idea of these soulbound nfts for governance and or the the delegators is like the problem you have typically in a dow is like you know you have let's say there's a thousand token holders or 2 000 token holders one not everyone is going to go and vote

and even if they all did not everyone is actually knowledgeable enough or informed enough to be voting so it's kind of like a skewed vote or a waste of vote because most people and correct me from wrong but this is just what i've seen is like most people are voting because they want the value or the token to accrue more value right they hold on to the token not because they're working on optimism or they're working on whatever the the dow is but they hold the token they want to see number go up this is like what drives this industry almost um and so the way that they're thinking about the business strategy is probably very different than those that are actually building it and want to do other things with the protocol so is the idea of kind of i know vitalik has talked about this a

lot is like the whole one token one vote is not ideal because you could just buy your way in and start voting right so we're trying to figure out other ways is that some of the problems that you're trying to fix with all these different itera um all these different like iterations of of i guess governance or is there other problems that are missing as well no i think um that's definitely it i think not creating a plutocracy is one avenue and then also the second one is making sure that the best people are making the best decisions possible at all times um so i think those are the two avenues right there you obviously don't want the rich people you know the people that hold the most erc20 tokens to be have you know all to say in what the protocol is doing um

but you also don't want to make it so broad that the whole community has like an equal voice right um you want to make sure that there's like a balance between that and uh making sure that the best is really at the end of the day i'm repeating myself up here but you want to make sure that the best decisions being made at all times and finding out the model that will achieve that goal is uh still being experimented but i do think it's some sort of um balance between these soulbound nfps decentralized identity will probably come into play at some point and obviously like the erc20 tokens that we're seeing already are there any examples of uh like if you can think of the projects you've worked on

who do you feel like has nailed governance the best and what was it about their project that allowed them to do that yeah i think um optimism is probably being the most innovative here um because they're really the first major product to be kind of exploring the soulbound nft aspect um i'm not going to say that they have the best governance right now but um i think as a whole as a whole i yeah i think governance is really hard right now especially in the current format um there's a lot of problems so i don't i'm gonna kind of cop out on this answer and say that no one's doing it really well um and everyone's just kind of like struggling to get through it and uh yeah

i think if you talk to any major dow operator right now there everyone's kind of on the same page where it's like okay this is not like working as best as it could obviously it's a huge improvement and a really important start on the direction that we want to be going but at the end of the day i think there's just like so much room to be had with designing the optimal governance system right um but i think we're moving in the right direction optimism is doing really well in that regard i think we'll see more and more protocols like implement some sort of form of this or like you know tying in web three identity and making sure strange i think just generally we're gonna see more and more protocols stray away from this one token one vote and more of trying to optimize

for one human one vote um so that is kind of where i expect the industry to go in the long run but to answer your question again i don't think anyone's doing this ex exceptionally well um and i think every dow operator that's leading a dow right now would probably agree with that you you mentioned before the this centralized verse decentralized and you know sometimes especially in the beginning uh movement happens faster through centralization and that moving to decentralization isn't necessarily uh i don't know i wouldn't say good thing but necessarily it doesn't make things easier right it actually can you know pump put the brakes on and cause a lot more chaos and confusion so i'm just

curious if somebody if one of our listeners was thinking about launching a dow or launching a token would you have any advice to them around uh maybe the the steps to taking the beginning to do that specific to governance or would you tell them to maybe hold governance power for a little bit longer until a certain point at which they feel at which you're there's a i don't know a benchmark by when okay now we can allow more voting from the community because we feel like we've achieved enough engagement you know do you think about it like that yeah i think um the easy or maybe hard answer here is

that no there's not one answer for every single project right it's all going to depend on kind of what we were talking about earlier and what the mission is right what is this project doing um but i think just generally like i'm always a fan especially within dowse as a whole is start small and progress from there do a small experiment and progress and iterate from there because if you try and do it at full scale right off the bat there's going to be issues um so i think if you are interested in exploring decentralizing your product or protocol or looking into dow governance and all this stuff i would start small and progress from there and allow yourself to iterate and have time to kind of fix the the holes that will pop up

because it will pop up for sure so number five is the ownership framework uh i'm assuming that means like the is that like the distribution of the tokens like who they're going to and you know how much is in the treasury versus how much goes to the community and so on and so forth or what's the ownership framework yeah i think the ownership framework um at the end of the day is i think the big question there is erc20 versus erc 721 um how do you want the community to have ownership over this so like ford apes definitely did the uh the erc 721 and then they decided to launch an erc20 some interesting aspects about that but um yeah i think uh that is really the key difference right there is like do

you want to be an nft project and have a governing body over that and there's like a lot of benefits there right where you can sell the nft and you see this with nouns right where they're selling an nft every day all that money goes through community treasury and if you have a noun announce uh pfp you control or you have a right over that treasury and that's a really clean model right because money's going into the treasury i have ownership by owning that nft and it's very straightforward um the other side of that is an erc20 which has its own benefits right like um the benefit there is that you have this liquid token um this fundable token that you can incentivize a lot easier so like nouns might have issues like incentivizing people um to do stuff even

though you have this massive treasury but at the end of the day it's really easy for an erc20 token um to just distribute ownership and be really quick and fast moving and like hey we want to incentivize this and we can distribute these tokens really easily to this large subset of community members um so i think that's really the difference there and so for projects uh or communities that um are going to distribute a token let's assume we're talking erc20 here which for anyone who doesn't know erc20 just means a fungible token um this is the code or whatever they call it on on ethereum um and so for anyone that is launching an erc20 let's say it's to start a dao based off a community we could think kind of the bankless model right they had a huge community

back in 2021 of last year they decided hey we're gonna launch a token to the community and we're gonna you know form a dow out of it i think they launched to like a few thousand people when they when they first did this launch back in i think it's may of last year what are the kind of things that we should be thinking about when we launch a token to let's say a large community like what ens did and optimism etc like in terms of just distribution like do you guys have any models to think about like how much should stay in the treasury how much should go to the community and how much you know should they have over that like how much control i guess you could say like how do you think about distribution of these tokens yeah i think the general trend

especially when we're like designing stuff with fire eyes is um community should have the maximum amount and the team and investors an insider should have the minimum amount possible so um generally like general framework here is do some sort of like retroactive airdrop um to kind of bootstrap this initial community allocate a large trunk whether this is like somewhere between 40 to 60 percent um to the community treasury uh and this will be up to the that existing community to govern and how they want to distribute it in the future and then maybe do like 20 to 30 percent um to the insiders like the team that is helped building it the investors if you have them um that is like the general distribution framework that i would go

about and like that's the standard that we've seen just within the industry um obviously there's a ton of improvements to be made um i think this is the general theme right now is that we're still pretty early in this whole web 3 journey and we're still learning like what the optimal models are but um yeah i think generally as much to the community as possible and the least amount possible to the team and investors is like the general model i would go for right and okay so we've talked a lot about sort of the governance and and that's obviously a big use case of of these tokens of course um one of the other side of it is you need value accrual right if your token goes to zero no one wants to hold onto that token you're just gonna piss off your community because they lost their

money um and when i think about this though if you're giving you know 60 percent to your community um you know if if they all just want to sell it because they want to make money off their airdrop which is what we see with a lot of air drops most of them end up tanking for a while afterwards um because it puts a lot of cell pressure on it so can you just walk us through what your thoughts are or maybe your frameworks or whatever it is when you're designing sort of a token launch is like how do you keep value accrual in mind when you're trying to distribute as many tokens as possible out to the community what are some things we should be thinking of so that we can get some by pressure or some hold pressure on this token so it doesn't just

go to zero as soon as you launch kind of thing yeah i think this is a good question and probably a very contentious one i think um the first consideration and uh no one wants to hear this but it's obviously the legal part right um if you're a us-based company there's no way in hell you're going to launch with a token that gives you cash flow rights over the protocol that's not going to fly you're going to get sued by the sec it's not going to be fun i'm not a lawyer this is not investment advice legal advice all that stuff but um yeah just from a legal perspective you are definitely restricted on the value of cruel part if you're outside the u.s you probably have a little bit more flexibility um but i think generally like this is a hot take i think value accrual

in a token actually doesn't matter what you want to be investing in if you're an investor and looking to allocate capital into these projects is what is the mode what is the mode that they have uni swap doesn't have any value accrual but guess what you have 75 percent of all decks volume that is what i would invest in because that you can't replace that um ave kind of has like you know staking model but it's not directly value accrual from the money that they're making from lending but guess what they're the largest market uh money market on ethereum right now um so that is really what i'm investing in or like what i would be looking at from a value accrual perspective is what is the mode that you have um and that i think is the most important part because like value accrual in a token is one governance

proposal away that's one form proposal right that can change in a heartbeat and um but the moat having 75 percent of all dex volume is not a governance proposal away that is like something about building a really good product right or a really good community um so i think in terms of like value crew i think a lot of people over index on that um you can even look at like it looks rare right great value accrual you know you get cash flow rights you get eat directly to your wallet but guess what the token's still gone down a ton because the what don't they have they don't have the mode um openc still dominates in volume um so i think if you are looking to implement value accrual the first thing you need to make sure is that you have that mode you have that product market fit you

have that usage um because even if you have value accrual it doesn't even matter because there's no money actually going outside of that i think if you are a project looking to launch and you have protocol level revenue or on-chain revenue and your lawyers are freaked out you pretty much just want to direct all of that cash flow to a shared treasury so that shared treasury that we were talking about earlier give it to the community diversify your treasury you see this with like super raring ens no they don't have direct value accrual but they're making a ton of money month over month that's all going to a dow treasury and again as i said earlier that's one governance proposal away you can distribute that value however you want in the future from one governance proposal that ends up going through you

know the governance framework um so that's kind of just general thoughts on like value accrual with tokens right now um and yeah the tldr have a have a product market fit have a mode before you think about value accrual because that can always come later right interesting so then if if a project and i think a lot of projects would fit into this category of not having emote and not having that value accrual so what would your does it mean that they shouldn't launch a token or can they take the step of launching a token just for governance or just as a social token but not give it liquidity do you see that as being a good starting point

or yeah just curious to to get your thoughts on that yeah i think if you're in a position where you have capital to spend time building a better product or a better community i would do that like that would be my general advice um but if you're in a position where you are strapped for cash and like you need some help like you can go about it that way i don't think this is like a one size fits all for every project you can obviously go ahead and launch that token if you think that that's gonna be beneficial for your product or your usage or like your community and all of that um so yeah i don't think that there's like one answer that fits all but i would generally say if you're in a position where you can spend time heads down building a better product and trying to

find that mode and trying to find that product market fit that's going to be the better long-term avenue right um if you're yeah i think you just generally want to be building for the long term if you're in a position to do that you should be doing that um and yeah i think there's definitely different approaches for different projects and it all just kind of depends on where you're at in your life cycle right to take as an example i mean bankrupt dow was basically launched as like a value list token right in the beginning just out to the community and it was like everyone just was trying to get organized and figure out what they wanted to do there was no products at that point uh and then i think at some point down the road liquidity was provided so that the token could

actually like um be on public markets and like and find a value but the token was almost used in the beginning before it was you know before there was liquidity provided as just like a like an organization tool i feel like uh for everyone to kind of start building up guilds and all that kind of stuff and figure out what they wanted to create and then they started to generate revenues after that um so i just thought that was an interesting uh interesting take and i i think this is a form that a lot of communities are going to start to do something we've been looking into as well with our community so any advice on those that are launching just a value list token just to sort of get organized and structure and then like you know get to the point where they're gonna provide liquidity

and and start to like manage a treasury or whatever yeah i think um pulling on that thread just a little bit um bankless dow right the community like if we're talking if we're tying this back in like the mode right was the bankless community you can't force the bankless community there was great vibes um and really what we did is we launched an erc20 token to empower them to coordinate on a much higher and higher scale right um the bank of this community was a passive community of individuals they weren't doing anything outside of just like consuming bankless content being there um but when you gave them an erc20 token to coordinate around that leveled them up that empowered them to you know go ahead and build products and now you know we have

all these different products right now you know bankers consulting which is like becoming like one of the leading you know web3 consulting firms we have bankwood's academy you know what it does is like these tokens enable um empower communities right to a whole new level that's not possible in web 2. um in terms of like general strategy on like providing liquidity i think like our approach there was like don't worry about it the community will coordinate around it um and they did and it took time and it wasn't the best avenue uh or like the the straightest path right to to that but um yeah the community came around to you know different ways to fix that problem and like one of the things that they did was like again one governance proposal let's launch olympus funds um so what

this did was like we allo the community allocated like 30 million bank to an olympus dow uh program bonding program where essentially you can trade in lp tokens on uni swap for discounted bank um and what that did uh was allow the community to lp give it to the dao and now the dao owns about eighty percent of all dex liquidity so that's one governance proposal away right um so i think on the liquidity front i think i wouldn't worry too much about it off the off the bat but um yeah i think just allow your community to be empowered to take the direction and uh it'll happen if there's a problem the community will realize that and they'll uh they'll figure out a solution to fix it

let's continue on the bank of style road for a second here vegas dow has been just super interesting to watch unfold i think it's one of the largest maybe it's not anymore but for a while there last year it was like the largest dow um i'm curious it's been a little over a year now that this has been around um what are like if you were to say what are the things that you guys would do differently is there anything that you could point out that you would have done differently in terms of let's say governance in terms of maybe the token structure even in terms of just like now i know you guys are sort of reorganizing uh into i think what is the bankless 2.0 model or whatever you guys are calling it um but maybe you can just talk about the lessons you've learned from bankless

dow over the last you know year and a few months yeah i think that this is a really great question um i think like one design choice that i wish we did at the beginning was ideally start on like a slightly smaller scale um obviously the banqus community is really big and really large and we had like a lot of activity around it but at the beginning it was like the big bang right like there was just so much chaos and like all of that um so i think one thing that we could have done better is like maybe be a little bit more organized and starting smaller right as i said earlier like when you're doing these dao experiments start small and expand from there and i think that's something that you know i think would have been beneficial um but at the end

of the day we had a really bold mission and we really wanted to empower this community so we made the decision to launch fully and like empower the thousands and thousands of community members to get involved right off the bat um and that has its own trade-offs like obviously we built a really strong you know vibrant community right off the bat but at the same time there was a lot of chaos and like organizational um like hurdles that we had to get through to get to where we are today and i don't think we've ironed all of them out i don't think any dow has either but um yeah i would say starting small smaller would have been a little bit more beneficial for us and like allowing us to take the model that we envisioned and like iterate from there over time would have been probably

the advice that i would give people now that i wish i took myself back in the day when we launched it kai you got any more questions about bank list our i'd be interested to we're chatting briefly before we started recording today about how you're working on helping bankless transition into more of a web3 business and i'm assuming that means bankless the media company bankless inc as opposed to bankless dow uh what is what does that entail what are you guys thinking where are you headed with that yeah i have to maybe like tip my toes you know around some certain details because we're like behind those doors on a little bit of this stuff but um i think generally here like

the the cats out of the bag are like the thing that people no one wants to talk about is that bankless is a web 2 company talking about web3 we're talking the talk but we're not walking the walk um and really what the goal is right now internally is how do we actually build like web 3 native business models like we rely a lot on advertisements and all of that and the sub stack membership model this is all web to all you know existing models but obviously like we're on a really fertile open landscape with web3 and how can we build um web3 tradition native models into a media business whether this looks like nfts are creating different mechanisms for membership access beyond just like putting in your credit card um you know

this is the stuff that we're looking to explore um whether that is like even more on the nfp front like how can we tokenize like content and how can we do all this stuff and build more like web3 business models um around this new infrastructure that is just has so much opportunity um and we really haven't seen that within the industry right now i think every media company and crypto is in this position where your web 2 media company talking about web3 and i think right now bankless is looking to at least change that and i don't know if we'll have the perfect model right off the bat but it's something that we're thinking a lot about internally as we move forward and how we want to scale bank list to you know the next level interesting i'm excited to see that play out i want to just compare so you have

bankless which is a media you know media platform essentially the podcast newsletter social probably a team of like i don't know i don't even think it's at 20 but some around there and then you have bankless dao which is like the same mission but there's like thousands of people and it's in the form of a dow it's like full-on native web 3 crypto style um i don't know if there's anything one to just take away on the two of those things like obviously a smaller team is going to be much easier to move and iterate and do things like that i don't know if you do anything on the operations or organization side within the dow but i'm just curious the way that bankless dow used to do it was they had certain guilds so they had a marketing guild i think you mentioned like a

uh and maybe this isn't a guild maybe it's a product of of bank of style but they have like the um consultancy they have the academy they know he has like have a writer's guild like so many different guilds how do they all sort of work together in this dow can you just sort of walk us through what that organization structure is like and maybe this isn't your wheelhouse so uh feel free to say you know this isn't really my thing but i'm just curious if you can kind of walk us through that a bit i don't know for sure i think um probably the big difference right now is really at the end of the day like just between the hq and dao like relationship hq is really just a participant within the broader bank with style ecosystem right so we're building around that and we're just participants

in the banquet style ecosystem so we're our own team and you're actually seeing the same model pop up within the down out a lot so you're seeing all these other teams that are just forming around their own core working groups and going in their own direction and building around that um i think in terms of guild so like the general organizational structure is that guilds are effectively talent pools for the dow um so if you're a marketing person or your design person or your technical developer um or if you're a writer there's a guild there's a town pool um for you to kind of join and from there you can kind of get pointed in the right direction so some guilds actually have their own projects so like the writers guild is all about like writing newsletters you don't really need much else other talent

outside of that to create these awesome newsletters so they have like five or six newsletters right now if you're a writer you can jump into writer's guild join other writers and start contributing to that um it gets a little bit more complicated when you have these bigger projects like academy and consulting where you need like different talent right so that was really the core goal with guilds is like okay what happens when we have this like massive project like banquo's academy where we need like a little technical talent developer talent we need writing talent i mean all that stuff um so those kind of culminate and pull from these different guilds hey we need someone to help with marketing go to the marketing guild hey can we get someone with marketing you bet them you know they fit in and you kind of build projects that

are uh adjacent to the doubt right so you can kind of think of guilds within banquet style as like these back office kind of uh talent pools or like public goods for the dow um whereas the projects that are built out of banquet style are kind of like the end goal right the end goal is not to just have like a guild of developers or something doing nothing but actually have projects from that those developers and like the other community members as well what's interesting about dao's the way i kind of see it is like you basically have this like formation this organizational structure where you can just build a bunch of products all at once and you happen to have the talent all incentivized to do it with you which like yeah google does that but it took them

you know 10 20 years to get to the point where they could start building and have enough like scalability within their team to build multiple products at once we're only like just past a year in bankless and they have bankless dow and they have multiple products that they're all working on and so it's like a dow is almost like a way to sort of just like go at hyper speed and building a company right you don't have to wait until the first product works and then you want to start the next one it's like you can do a bunch of them all at the same time because you have so much talent and again everyone within that talent is all incentivized via their you know erc20 token um is that kind of how you would see a dow as well in this case yeah and i think like the major unlock

there is a tokenization aspect like i said earlier like bankless community was a very passive community and they just consumed content and then you launched token and now they're incentivized to build really cool products that are valued crew accrue a crew creative for the broader crypto ecosystem um so yeah i think uh tokens empower communities to you know take initiative and take it to the next level and i think that's a really powerful unlock for you know the world as a whole the business yeah absolutely okay i have one last question and then i know jay uh as we wrap up because we do have a hard stop here but jay we'll do a speed round uh just a couple fun questions for you um one of the things i've seen people talking about

specifically in our community um is like multi-token ecosystem so multi-token dows and maybe i guess this is what we kind of already talked about with optimism but you see it a lot with like games um like web 3 games right where one token just doesn't seem to be enough you need to have multiple so that you can make sure they all stay balanced et cetera is this something that is going to make its way into sort of like the dow ecosystems as well where they might have more than one token whether that's like i don't know for governance or maybe it helps to um with value accrual i'm not sure but have you seen much or are you thinking much about like multi-token ecosystems for dows yeah i think we're seeing it more and more um within different projects i

think within banquets tau i think the multi-token model there is that you have all these products that are you know a lot of them are being successful um and they can like sub dial out right so they can just create a sub dial and be like have their own token and be like a subbed out to the broader bank of style ecosystem so that's the the multi-token strategy that i see within banquet style um obviously with each project with each different like you know sector of the crypto economy whether it's gaming whether it's nfps there's definitely a multi-token approach and like you're seeing um i think it's like redacted right now redacted cartel is like taking a governance token and uh economics rights token so you have a token with governance rights and you have a token with economics rights um again i think

the theme i've said this over and over again who knows what the right model is right now i think everyone's experimenting and trying to you know apply their best thinking to what is the optimal model for that specific project but you're definitely seeing more multi-token you know models coming about whether or not they'll scale and be the right model is uh something that i don't know the answer of i don't know if anyone does but we're all experimenting and we're all trying to figure this out as a whole um and i think that's what's important about it i love that word experimenting that's that's the that's the belief in the mantra that we all wake up wake up with every day right now i feel it's just experiment get in the sandbox try and build something realize that it's gonna

fall over rebuild it again learn repeat and we're i think that's we definitely say like we're on the frontier um everyone's kind of exploring and experimenting and trying to figure this out together so i think that's what's important and you know sometimes people are going to fail some projects are going to fail some people are going to find the success um and you know one the nice thing is that once you hit the right model and you find the right model um everything's open source and everyone's super collaborative and that's what like spark you know the yield farming summer and d5 summer and all that stuff is that people find the right model and that sparks a fire and uh once you kind of like unlock that part of the skill tree you can progress to the next thing and we're just getting to harder and harder problems and i think

you know tying into the earlier conversation governance is like the problem right now and we're trying to find you know the best ways to optimize that in the best possible way so um experimenting is what we're all doing well thanks thanks for thanks for being on the frontier lucas we uh we admire and are inspired by you that's for sure okay i got a couple speed round questions for you just some fun questions to wrap up uh and then uh we'll give you a chance uh to uh give a little bit of your show at the end too uh okay first what's an nft you'll never sell oh that's a good one um william peacer who's our nfp guy gave gifted us all on the bankless team cool cats like over a

year and a half ago those have become worth you know a little bit much and i think selling it would be really tough so um any nft that's given to you as a personal gift from someone else is really hard to sell um so yeah probably the cool cat right now but any other gift that i've received from some of my friends you know you just can't dump them you can't dump on it because then they can see that you dumped it yeah you know it's like yeah you know usually in the past you could re-gift it or you know something like that nobody had to know favorite person to follow on twitter djent spartan love the yeah sweet uh

project web3 crypto dao nft any project in the space uh that you're excited about you're following closely right now um right now i'm just looking forward to the resurgence of d5 1.0 so the the obvious eu swaps and synthetics all these products have built like really powerful notes and really strong product market fits and their tokens have been absolutely destroyed over the past year and a half as dense farting said we were in the 18th month d5 bear market i didn't want to believe him at the time but he was definitely right and uh yeah i think at the end of the day all those projects a lot of the d5 1.0 you know the makers and all that stuff you know have built these really incredible products that have scaled and uh their tokens don't reflect that so

that's kind of where i'm looking at right now is that investment advice [Laughter] where where do you think we are at if he said 18 months are we at the end of that 18 months are we in the middle of 18 months i've perpetually thought we're at the end of the 18 months eventually like i'll be right back as long as you have that conviction to keep believing uh something you've purchased recently for under 100 that brings you joy does not have to be crypto or web3 related uh oh man um that's a good one man

i bought some patio furniture that i got for free from my house yeah that's awesome is it the patio furniture that david was trying to sell no that was not for free and that was definitely not under a hundred dollars yeah no my deca that i have in sun valley is sick and i love to spend time on it so having that patio furniture was definitely a big one nice that's awesome uh okay final question uh if you had a billboard that a billion people would see what message would you write on that billboard go bankless nice love it

so quick so good you're the first person to answer that question so exactly that's a tough question well done awesome uh all right before uh before we wrap here lucas we'd love to give you a chance to uh give your show tell people where they can find you where they can follow you um yeah let us know yeah absolutely um if you want to follow me personally i'm on twitter xerox underscore lucas i have a m effort that looks a lot like dc investors it's my own mfr don't get confused um if you want to read a lot about crypto and web 3 you can sign up to the bankless newsletter it's way better than the banquets podcast i'm on the record saying that um and it's all free so definitely check

that out if you're looking to level up your crypto game and then um if you're interested in learning about governance and tokens and want to participate on fire as we actually launched this thing called wildfire and this is essentially our decentralization process in helping empower individuals to get involved in governance so we're literally just yellowing money into this fund essentially that will distribute money to people that are participating in governance for products that we've helped work closely with over the years so definitely check out wildfire as well there's a discord for that um there's also a twitter i believe i'm not forgetting the twitter name but definitely check that out if you're interested in learning about governance and getting involved with a lot of the

we'll put uh we'll put the links to all those in the show notes so everyone can find those easily and if you're not signed up to the bankless newsletter by now like give your head a shake and then go sign up because it is definitely the best newsletter in this space for sure awesome lucas thanks so much for the time really appreciate you taking some time out of uh out of paris and giving us a breakdown of uh everything that you're working on it's uh yeah it's it's inspiring super exciting and i think we're gonna have to have you back on at some point in the future because uh like you said we're all we're all just experimenting and figuring this out right now so uh i i'm sure six months from now we'll have another framework to

discuss absolutely and it has gotten only hotter since we started this it's gonna say go jump in a pool or or have a shower or whatever i cannot find a pool for the life of me is 160 degrees noisy i'm in a puddle of sweat unfortunately this podcast isn't getting repaired i was gonna say i was gonna suggest that we ask if anyone in paris has a pool for you but this podcast won't launch until next week at which point you might be gone all right thanks lucas this is awesome thank you guys thank you for listening to web3 academy we hope this helps you along your web3 journey if it does please share this episode and subscribe so you don't miss the next one

by the way if you have yet to join the discord community you are missing out this is where all the magic happens this is where we learn where we ask questions where we network uh you want to be in there the link to join is in the description below and finally a quick disclaimer nothing in this podcast was financial advice crypto and web 3 can be risky you can literally lose it all in fact if you invest on account of what we say you probably will lose it all so don't do that in all honesty the point of this podcast is to remove the noise of markets and price and focus on utility and implementation anyway so you should not take any of this as financial advice thank you friends and see you in the next one